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< Back Advice from My Hero Michael Daigneault Mar 26, 2019 Six key responsibilities of every board, gleaned from my conversation with world-renowned expert Ram Charan. There’s nothing like meeting your hero. For some, that might equate to a football player or a musician or maybe a politician — a well-known celebrity type, whose mere physical presence is immediately recognized by all. For a governance geek like me, heroes are fewer and farther in between. But they do exist and when they do, they rise like giants. Thanks to my good friends at CUES, I met my hero a few months ago on the eve of the 2019 CUES Symposium in Nassau, Bahamas. And because they are, indeed, good friends, I was lucky enough to be afforded some private time with Ram Charan, the world’s leading expert in corporate governance. Along with some members of my team, I explored some of the most pressing concerns of the day with him — challenges that perplex even the most skilled and tenured credit union board members and CEOs. I've got the picture to prove it! I imagine I’ll be mining the notes from our conversation for quite a time to come, and I look forward to bringing you the fruits of those labors in future blogs. For now, I am pleased to share with you six key responsibilities central for every board outlined by Ram as he spoke to the board chairs and CEOs assembled at the Symposium: Ensure effective board composition. This is one of your board’s most fundamental roles and responsibilities. Board renewal at its core is also one of the most difficult. The State of Credit Union Governance, 2018, published by Quantum Governance and CUES found that a full 46% of respondents described their effectiveness in finding, recruiting and nominating new talent to their board as only adequate or less than adequate. Do you have the right directors and the right officers for your board? Don’t just hire your CEO, coach him or her for success, too. If you are lucky enough to have the right CEO, take care not to lose him or her. Ensure that you have a strong relationship with your CEO, as well as a succession plan in place on day one. Develop the right strategy to lead you into the future. Here it’s important to work in a full, constructive partnership with your credit union’s CEO and management team. Focus on the vision, mission, culture, strategic goals, objectives and metrics, and then let your CEO and his/her management team worry about operational work plans that support effective implementation. Keep an eye toward the horizon. Are you clear that you see things today will build the future tomorrow? Look for opportunities; many will fail but many will grow. The board adds value in asking questions of opportunity and in sowing the seeds. Stay current on important trends. Allocate enough time at the board level to learn about industry trends so that you can contribute to the strategy effectively. Study FinTech, digital corporations, consumer trends and more — anything that will give your credit union an edge over its competitors. Monitor the credit union’s performance. Rely on your CEO and his/her management team to deliver the data you need to monitor performance. Ensure that you are asking questions that “trust but verify” the credit union’s position and progress. Be sure to rely also on empirical data, and finally, ask yourselves these questions. In the last quarter: What three things: 1) Have we done very well; 2) Have we not done well; and 3) Will we do differently? Previous Next

< Back Coming Together for the Common Good Michael Daigneault Dec 1, 2019 Consider multiple perspectives and build consensus— not unanimity—to ensure your CU is making good decisions. If you Google “decision-making,” we think you’ll be amazed at what comes up in the search results: “The Top 5 Decision-Making Models You Need to Know,” “Models of Decision-Making: Rational, Administrative and Retrospective Decision-Making Models,” the “Most Popular Decision-Making Models,” and even “Decision-Making Models of Decision-Making.” And the list goes on. Wouldn’t it be wonderful if there was a simple, no-fuss, one-size-fits-all model that we as leaders of our credit unions could apply—be it in the boardroom or in the halls of our CUs’ administrative offices—that could assure us that we were making the right decisions? Wouldn’t it be nice to know we’re making the best decisions that always put our members’ interests first while delivering the most effective outcomes for our credit unions? Unfortunately, it’s not that easy. A former colleague from what was then the Ethics Resource Center, a Washington, D.C., think tank and consultancy, used to say that decisions are the hardest when there are two competing values at play. And we think he’s right. It’s easy to make good decisions when the options are black and white, good and bad, positive and negative. Should you merge with the larger, more solvent credit union when yours is hours away from shutting its doors? Is the core conversion a go when you have the funds to switch and your current system is on its last legs? Should you promote the current VP/finance to CFO when she’s fully capable, has the requisite skills, the backing of the board, a great relationship with you (the CEO) and the trust of senior management? It’s easy to see how you can quickly get to “yes” on these questions and many others. But when you and your colleagues are in the boardroom—or managing your credit union from the C-suite—how do you make decisions when the questions are not as clear? What do you do when there are two important, competing values at play?How does a credit union decide between “serving member interests” and “ensuring the financial safety and soundness of the credit union?” How do you balance the credit union’s ongoing health and meaningful outreach in the community?Perhaps the most important job of board members and senior management alike is to ask questions that lead to not only expeditious decision-making but the right decisions. Perhaps the most important job of board members and senior management alike is to ask questions that lead to not only expeditious decision-making but the right decisions. Commit to Having the Hard Conversation First and foremost, begin by committing to having the hard conversations that you need to have in both the boardroom and the C-suite. While researching for the soon-to-be-released 2020 State of Credit Union Governance report, we found that more than a third of respondents said their boards do only an adequate or less-than-adequate job of asking the hard questions that need to be asked. And yet, the same study found that boards report overwhelmingly that they are “making quality decisions.” How can this be? Fundamental to effective decision-making is ensuring that, as credit union leaders, you are upping your game in terms of asking hard questions. What do we mean by “hard questions?” Perhaps the most important job of board members and senior management alike is to ask questions that lead to not only expeditious decision-making but the right decisions for the credit union and ultimately for members. If you fail to do so, you’re not living up to your role and responsibility—either as a volunteer or as a paid leader of your credit union. Being open and inviting multiple perspectives into difficult conversations is critical to decision-making. It’s vital to ensure that every voice in the room is heard. Remember, that your credit union is a nonprofit governed by a board of directors, not a privately owned company led by a chairman/CEO. By design, the strength of a cooperative leadership structure comes from the chorus of voices that governs it—even though at times it may be cumbersome. (Remember cooperative principle No. 2, democratic member control? Read about it .) Be Conscious of Unconscious Thought Daniel Kahneman is an Israeli-American psychologist and economist who won a Nobel prize for his work on judgment and decision-making, much of it outlined in his book Thinking, Fast and Slow. In the book, Kahneman suggests that for the most part, individuals spend about 90% of their time “thinking fast,” or motivated by subconscious or unconscious thought, and only 10% of their time “thinking slow,” or motivated by rational or conscious thought. What does this have to do with the decisions coming before your credit union’s board and senior management? Well, everything. It means that everyone in the boardroom or in the C-suite is coming to the table with their own biases, and they are largely subconscious. And these decision-makers are, believe it or not, largely driven by those biases. Remember that discussion that you had about moving away from brick and mortar? Or the presentation that your CEO and her team made to the board on that potential merger? What about the discussions you’ve been having in executive session about the CEO’s variable pay? All of these discussions and more are being seen through different lenses by various board members and senior leaders. A board member who believes in high-touch customer service and relishes the personal connection with the tellers in his local branch will forever believe that brick and mortar is the way to go. Legacy board members may be deeply concerned about what a merger might mean for their own board positions. And finally, the executive director at the homeless shelter who serves on your board will likely find the CEO’s pay enviable and maybe even too generous, regardless of performance. Remember, these perspectives—even if they are unconscious—are always at play, and they have an impact on each and every meeting and in each and every conversation, whether we want to believe it or not. Be Clear About What Consensus Means … and What It Doesn’t Another critical component to effective decision-making is to understand the concept of consensus as it is designed to operate in the credit union boardroom. The reality is that a significant number of credit union leaders still believe that consensus exists only when everyone is in complete agreement—what some would term “absolute consensus” or simply “unanimity.” Sure, it feels great when we can all agree with a motion or proposal. And yes, sometimes a thoughtful compromise is the best course. But absolute consensus or unanimity—while desirable or comforting at times—is not necessary to make good decisions in the boardroom. Indeed, there are even times when insistence on unanimity may cause a proposal or initiative to become a mere shell of what it once was. If meaningful changes are made just to satisfy one or two hold-out votes, an initiative may become so modified or watered-down that it may no longer add the significant value that the original proposal offered. What, then, is an appropriate degree of consensus in the boardroom? Merriam-Webster defines it as “a general agreement about something.” Note the word “general.” It involves coming to an agreement to support a decision that is in the best interest of the whole. The process of coming to consensus is designed to afford everyone an opportunity to share their thoughts and opinions about the subject at hand. Yep, there it is again—genuinely hearing everyone’s voice. Consensus in the boardroom, therefore, does not require unanimity. What it does require is you and your colleagues asking the hard questions, challenging your values, raising your subconscious thinking to the conscious level and coming to a decision that is in the best interest of the whole. Not everyone may agree when you come to a consensus, but if you have a quorum, a majority of those voting on the matter are generally considered a consensus on regular matters coming before the board. (Note that the Federal Credit Union Bylaws , published by the National Credit Union Administration include only a simple majority—50% plus one voting member for a motion to pass.) And remember, once the final vote is taken on a matter, the decision has been made. The entire board is now expected to speak with one voice … even if you were one of the members voting against the motion. Be Transparent About Your Decision-Making We end where we began, by sharing a lesson from our days at the Ethics Resource Center. We had the good fortune to work with a select group of researchers—ethics officers at Fortune 500 companies, consultants and practitioners from around the nation—in a program we developed called the ERC Fellows Program. Together, we took on leading questions and issues in the field of business ethics. One such question was, “What makes for an ethical leader?” Surprisingly enough, our research led us back to decision-making. We found that regardless of how ethical the leader was as an individual, in order to be seen as an ethical leader, the individual’s decision-making process needed to be seen as one that had integrity. Our research with the Ethics Resource Center offered four key recommendations on the notion of ethical decision-making and ethical leadership: When announcing critical decisions, be certain to acknowledge the ethical issues (competing values or even subconscious thinking) inherent in the situation being addressed and how the proposed solution (the decision) addresses those ethical issues. When discussing the ethics of key decisions, publicly acknowledge the difficulty of resolving such dilemmas and challenges and your awareness of the fact that ethical people could reasonably disagree on how best to resolve the dilemma. (Remember, you and your colleagues will prioritize different values, and this is where subconscious thinking will emerge!) Insist that your direct reports (or for boards, the CEO and senior management) talk you through the ethics of their decisions for review and/or approval at the same level of detail they discuss other business considerations. (But do so without micromanaging the CEO/senior management!) Ensure that leaders understand their impact on the organization’s culture and how their attention or inattention to the ethical dimension of their choices impacts the organization’s culture. Given the unique role of credit union leaders as stewards of their members’ funds, we believe the role of the credit union leader—be they volunteer or paid—as effective decision-makers is paramount. Have the courage to ask the hard questions. Engage all of the voices in your boardrooms, volunteers and senior management alike. Be conscious of both rational and subconscious thought. Know what consensus really means and what it doesn’t. And be clear about the decisions you make—all for the betterment of your members. 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< Back Board Liaisons Direct Directors and Staff Toward Good Governance Caitlin Hatch Apr 26, 2019 Generally keeping things organized and on track is no small feat—and it’s an important one. Credit union leaders have become increasingly aware of the importance of good governance and have made an effort to ensure that their credit unions are adopting cutting-edge governance and leadership practices. From assessing the effectiveness of their boards and governance systems to updating their governance frameworks, policies and procedures to improving their board structures, committees and charters, good governance is taking center stage. These efforts—along with the steady workload of supporting a credit union board—require strong leadership from the board chair, CEO and a governance committee, but also from an often-overlooked and under-appreciated staff person—the board liaison. At a minimum, today’s board liaisons help to organize and disseminate meeting materials, plan and support the execution of board meetings and retreats, take minutes, and generally help keep things organized and on track so that the board can do its work. But more and more, the board liaison’s role is being expanded and now is considered by many a management position that has been tasked to actively support—and improve—the board’s work. In its expanded role, board liaisons also ask a fundamental question regarding good governance: How can the credit union’s board and governance become even more effective? Those board liaisons with sufficient experience are being tasked to help design and manage the information architecture for the board, ensure the value of board meetings and retreats; coordinate regular governance and strategic assessments, as well as support and guide the board in fulfilling its governance, strategic and leadership responsibilities. They are key players in fostering the governance cultures of their credit union board and, thus, the credit unions themselves. Historically, the individual tasked with this role has been the CEO’s executive assistant. Why? Generally, because that’s someone the CEO works closely with and trusts, someone who knows the credit union and has easy access to the key players, someone who has the nuanced administrative and people skills required to regularly communicate with board and committee members at the most senior level. They are, most often, consummate, professional women. I say “women” because, while a man could certainly perform this critical function, we have met very few men who actually do. At CUES’ first event for board liaisons, 19 individuals attended—all women—from across the country and from credit unions of varying sizes and complexities. They all agreed that they regularly perform many of a board secretary’s core duties—helping to safeguard the integrity of the governance framework; ensuring compliance with regulatory requirements; implementing the board’s decisions; and facilitating communication with and among the credit union’s leadership. However, we did learn that there are remarkably different approaches to the role. For example, the title of the person fulfilling the “board liaison” role currently varies a great deal from credit union to credit union (i.e., everything from “chief of staff,” “governance officer” and “board affairs director” to “board & executive relations,” “board administrator” and “board assistant”). And, just as the titles vary, the framing and scope of the position varies, too. While it’s a critical role, there appears to be no commonly accepted definition of the “board liaison” position within the credit union community at all! Working closely with CUES, other colleagues in the credit union community and board liaisons throughout the U.S. and Canada, we hope to help change this, and encourage a much greater appreciation for and deeper understanding of the importance of today’s board liaisons. The fact that the board liaison, at least at this early stage of conception, looks to be one that is largely filled by women, is to be celebrated—especially given the expanding and growing role that board liaisons are experiencing in credit union leadership. While there are now twice as many female CEOs in the credit union community as there were 10 years ago, still, less than one in five CEOs is a woman (for credit unions with assets over $1 billion). This is progress, but there still aren’t enough women’s voices among those in credit union leadership positions. Still, there remains much more to learn about the board liaison position and the vital role women are currently—and should be—playing as they shape the governance of their credit unions. Caitlin Hatch previously served as a senior consultant with Quantum Governance and has worked with credit unions for the past eight years, focusing on governance and strategic planning. Prior to that, she served for 25 years as general counsel and corporate secretary for the largest anthracite coal company in the United States. Previous Next

< Back Hudson Valley Credit Union’s Call for Board Candidates Refresh Jennie Boden and Dr. Alexander Stein Feb 1, 2022 As part of its board recruitment renewal project, Hudson Valley CU developed a call for candidates that outlined specific attributes that matched its changing governance needs and values. Before Nominations are being accepted through Nov. 1 for our 2020 Board of Directors Election. Board members are volunteers elected by the credit union membership and are responsible for the general direction of the credit union, leading us forward and positioning the credit union to respond to members’ future needs. Directors must carry out their duties in the best interest of the membership, conforming to all applicable rules and regulations, as well as sound business practices. Members with strong backgrounds in a variety of fields are needed, including business, finance or investments, human resources, marketing or information technology. A director must have a working familiarity with basic finance and accounting practices, including the ability to read and understand the credit union’s balance sheet and income statement. Board members volunteer an average of 10-15 hours per month to credit union business and are also required to attend a monthly meeting in Poughkeepsie, New York, as well as serve on one or two additional committees. After Nominations are being accepted now through Feb. 25 for the Hudson Valley Credit Union 2021 Board of Directors. Our Board members are volunteers elected by the credit union membership and responsible for working in partnership with our Management Team to lead the credit union to mission success: to create financial security and a better quality of life. Our Board provides governance and leadership; visionary, strategic direction; and fiduciary oversight, and we’re looking for members who are experienced critical and strategic thinkers, with a keen ability to focus on the future. If you are independent-minded but can also work to build consensus among a group of diverse people, we need your skills! And, while you don’t need a degree in finance, you do need to be comfortable reading financial statements and analyzing organizations from a strategic point of view. We are a fast-growing credit union, with a commitment to good governance and acting with integrity. If you think you have the right mix of skills, talents and attributes, can commit to an average of 10-15 hours per month in service of our credit union, plus attend a monthly meeting in Poughkeepsie, New York, and serve on at least one of our board-level committees, visit our website at hvcu.org . Alexander Stein, Ph.D . , is founder of Dolus Advisors , a consultancy that helps leaders address psychologically complex organizational challenges. Previous Next

< Back Is Your Organizational Success An Accident? Gisele Manole & Jennie Boden Nov 22, 2022 New study suggests where to look for the answer. We’ve been studying credit union governance for more than a decade now and amassed mountains of data on credit unions of all asset sizes and from all over North America. Perhaps the most frequently asked question we hear is some variation of, “How do we know when we’re getting it right? Our assets are increasing, and our membership is growing so we must be governing ourselves well. Right?” As we prepare to publish The State of Credit Union Governance, 2023 Report, we looked closely at the data to see if it was clear to us what the key indicators were that a credit union was governing itself well—that as a credit union’s assets and membership grew, the organization’s governance practices were evolving too, both in terms of meeting changing regulations and best practices. What we learned focused our attention on four things: 1) board members meeting their roles and responsibilities; 2) members of the credit union’s governing system (board and supervisory/audit committee members and senior leadership) meeting high accountability measures; 3) strong levels of volunteer engagement; and 4) building and maintaining a leadership culture of trust. We found there is a significant positive correlation among each of these four areas of governance—meaning that if a respondent reports that their credit union is highly effective in one of the governing elements, they generally report that they are highly effective in the other three elements, too. Therefore, the four elements—accountability, board member roles and responsibilities, engagement and trust—are inextricably linked and together provide tremendous insight into the strength of your credit union’s governance. Figure 1: The Four Elements of Good Governance These findings identify the four elements as likely keys to unlocking the secret to good governance and creating a high-functioning board. In addition to pinpointing areas of focus, our findings suggest that actions to improve the effectiveness of one of the four elements may lead to improved effectiveness in the other three elements. So, as we begin to more succinctly answer the question, “How do we know when we’re getting it right?” we can look to these four areas of governance for some indication of whether your credit union’s board and executive leadership are “getting it right” or not, and whether further study is necessary to identify which element of your governance needs your focus to ensure the continued success of your vision and mission. Previous Next

< Back Get Your House in Order—Now, If Need Be Michael Daigneault and Jennie Boden Aug 30, 2018 There is no ‘wrong’ time to deal with fundamental governance issues. We read with interest a recent article about governance that discussed the importance of boards not addressing their governance issues “in the wrong places at the wrong times.” The authors suggested that many times boards discuss governance issues during precious time in sessions dedicated for other important work—such as strategic planning. They posit that this is distracting and a poor use of time for those taking part and to the goals of the session. They have a point. On one hand, the limited time a board spends together should be treasured– and treated as a resource to be judiciously and appropriately allocated. Strategic planning discussions with management need to happen and are a vital aspect of a board’s role. But on the other hand, if your credit union’s governance challenges are so real that they are clouding your ability to strategize or otherwise effectively lead, there may not be a “wrong” time to deal with them. If governance discussions arise in the context of other discussions, unresolved issues may exist that need to be effectively dealt with ASAP so that governance differences or issues don’t unduly interfere with how you successfully execute your governance roles and responsibilities—strategic planning included! A Need for Conversations on Governance Our recent study, The State of Credit Union Governance, 2018, Five Data-Driven Recommendations for Future Success , found evidence that a good number of credit unions are struggling with governance issues. Of our six key findings , two help tell the story of when to discuss governance: 1. Board members and CEOs frequently differ on their perceptions of governance, with board members and CEOs differing on 84 percent of the survey’s key questions, agreeing on only 16 percent of them (with the exception of the supervisory committee survey section, where more agreement was found). 2. CEOs and senior staff perceive lower levels of trust, with just 27 percent of senior staff and 25 percent of CEOs reporting that their boards were very effective at building a leadership culture of trust, compared to 53 percent of supervisory committee members and 44 percent of board members. We see evidence of these challenges and more in our work with credit unions. Time and time again, we’ll incorporate a strategic and governance assessment and a planning session into one engagement. After all, what could be more strategic than getting your governance house in order? At a recent strategic planning session, a client spent some time in a facilitated executive session, building trust between the board and the CEO. From our point of view, this discussion was probably one of the most important, strategic steps this credit union could take. More and more credit unions are opting to include a strategic goal on governance in their strategic plans. This is not to suggest that you should completely eclipse your normal agendas for all things governance. The article’s authors made some relevant points, and we agree wholeheartedly with most of their recommendations: Dedicated time for governance training is a must. Focus on board member education and governance issues—and to this we would add strategic matters—at every board meeting. Give permission to each other (not just to the CEO or senior staff) to check each other (appropriately) when boundaries are crossed. And as already mentioned, we could support the idea that governance issues not take over every meeting unless the governance issue is so fundamental (i.e., a loss of trust between the board and the CEO; a lack of engagement among board members; critical disagreement on roles and responsibilities, etc.) that it would derail all other discussions or progress. If this is the case, you must have the courage to change course. Agendas are important. Timelines, yes, are meant to be kept. But, remember the saying, “culture will eat strategy for breakfast,” and it’s true. Get your governance house in order. Now’s the right time to do so! Previous Next

< Back Moving Beyond The Strategic 'Moment' Michael Daigneault and Jennie Boden Sep 27, 2016 Incorporate strategic planning and thinking into your routine discourse. When more than 30 percent of our clients describe themselves as “less than effective” at something, we sit up and take notice. And that’s exactly how (and how many) of the board members and CEOs we work with describe the challenge of articulating a compelling future vision for their credit unions. Not having a future vision for your credit union is a genuine problem, but one that can be overcome (though not easily, or a third of our clients wouldn’t be struggling with it!). Is your credit union challenged with crafting or updating the foundational components of your overall strategic plan—vision, mission and strategic goals—as well as the more specific strategic objectives and metrics undergirding them? It's worth the struggle to get your future vision right. This is much more than just a convenient tagline or agreeable-sounding statement in your annual report. The conscious or unconscious future vision that a board and senior team hold in their heads has real consequences. Crafting a clear and effective path forward that will truly benefit members is among the most critical and nuanced challenges you will collectively undertake. Yet many boards and executive teams spend less time thinking about the consequential strategic issues facing their credit union than they do on small changes to the loan-loss ratio, car loan volume or even on a single member complaint suggesting that the carpet needs to be replaced in a branch. We recently facilitated the CUES Director Development Seminar in Santa Fe, New Mexico. When we asked the 100-plus attendees who included strategic discussions regularly on their board meeting agendas, one brave soul posited, “Well, we have an agenda item called the ‘strategic moment.’” Though the room spontaneously filled with laughter, the speaker was quite serious, and everyone knew it. Many other attendees may have recognized that by including such a “moment” on the agenda, their colleague was likely well ahead of their own routine meetings typically filled with data-intensive, financial and fiduciary oversight reports. Veteran directors may recall the days when their credit union was just forming and their role was to pour over financial statements, do cash counts and fill the void that a lack of professional staff created. Today the director’s role is quite different. Unless your credit union is very small or in start-up mode, you rely on professional staff to brief you on financial and fiduciary reports. You need to provide effective oversight, hold staff appropriately accountable—and then move effectively to your strategic responsibilities that will help propel your credit union to flourish into the future. In that spirit, we recently developed a list of sample strategic topics for directors to discuss in board meetings, even just for 20-30 minutes. Not all of them are applicable to your situation, but they are the types of questions that can help you regularly exercise your strategic thinking muscles: What criteria would you use in considering—or rejecting—an offer to merge your credit union into a larger one? What types of risks does the evolution of payment systems foreshadow for your credit union? How is your credit union growing? How might you need to grow differently in the future? Even if your credit union is growing, is it genuinely improving members’ financial lives? What would the “ideal” board for the credit union you envision in the future be like? Do you have the right blend of directors for that future? What would the future focus be? What committees would the board have? What type of relationship would it have with your CEO and executive team? What type of relationship would it have with your members and the community? How does your credit union define its risk tolerance or philosophy? Are you too risk-averse? How does your credit union’s risk profile compare to peers? How should you balance ROA, risk and stewardship to members? How do you leverage your cooperative culture into a competitive advantage? Are there other success measures you should be looking at, beyond financial performance? We strongly encourage the board to work hard to fine-tune a strategic plan that includes clear vision and mission statements, strategic goals, objectives and metrics in constructive partnership with your committee leadership, CEO and executive team. After reaching a consensus on the features on the accompanying chart shown in blue, challenge your CEO and executive team to develop their organizational work plans to meet or exceed your agreed-upon strategic goals. But don’t stop there. Include regular and ongoing strategic thinking, discourse and potential changes to your strategic plan, if necessary, in board meetings throughout the year. Insist that your CEO and management team report regularly on the strategic metrics of success as you march toward achieving your strategic goals and objectives. Consider changes in the marketplace or your business environment regularly to assess whether anything needs to be fine-tuned, adjusted or even eliminated. Strategic planning and thinking are continual processes. Off-site sessions annually or every few years may be helpful to recalibrate your leadership’s thinking, but they’re not the end-all. The real work of strategic planning should be a regular feature of the discourse and thinking of the board and executive team—day in and day out, moving beyond the “moment” (though that’s a good start) to become the central focus of your most important deliberations. Previous Next

< Back The State of Credit Union Governance, 2018: Six Key Findings Michael Daigneault and Jennie Boden Jan 23, 2018 Use them to increase your board’s focus and effectiveness. We’ve been regularly surveying credit union board members, supervisory (“audit”) committee members, CEOs and senior staff on the executive team for the past five years. And for as many years as we’ve been surveying them, we’ve dreamed about the notion of pulling together a “state of the state” of credit union governance report—both to forward our own understanding of broad trends we’re seeing in the field, and also so that we can share the combined results with you, our friends, colleagues and clients in the credit union community. The culmination of that dream is The State of Credit Union Governance, 2018: Five Data-Driven Recommendations for Future Success . Today, we are pleased to share the report’s key findings with you. We hope that they will challenge you to increase the focus on effectiveness of governance and leadership at your organization—all toward the betterment of your credit union and its members. Key Findings We identified six key findings in total: Board members and CEOs have differing perceptions of governance . Their answers differ on 84 percent of the survey’s 21 key questions, fundamental to good governance—with the exception of the Supervisory Committee survey section, where there is more agreement. (Please note: Percentages throughout the report are rounded up to the nearest decimal; therefore, figures may not total 100 percent.) Board member and CEO perceptions diverge based on tenure. Board members who have served on their boards for a long time have more positive views concerning governance than those board members who have less tenure. Conversely, CEOs with longer tenures tend to be more negative than CEOs with shorter tenures. Bigger really may be better. For 18 of the 21 key questions asked, board members and CEOs of credit unions with assets of $1 billion or greater had survey scores that were statistically significantly higher overall (and therefore more positive views of the CU’s overall governance) than those credit unions with assets ranging from $500 million to $999 million. That is, larger credit unions tend to rate their governance practices higher than those of smaller credit unions. Credit unions that don’t undertake a more comprehensive assessment may have a skewed perception. Those credit unions that participated in survey-only assessments, opting not to include interviews, a document review and a retreat as a part of their process, tended to have more positive scores in many of the areas that we assessed. While the exact reasons for this more rosy viewpoint are unknown, it is a finding that is of genuine concern: Such a skewed—overly positive—viewpoint could cause some credit unions not to take corrective actions when, in fact, some action may be prudent. Respondents are concerned about recruiting future board members. Survey participants expressed concern with the board’s ability to attract the right people to serve on the board in the future, with a full 46 percent of respondents describing their effectiveness in finding, recruiting and nominating new talent as only adequate or less than adequate. CEOs and senior staff perceive lower levels of trust. Just 27 percent of senior staff and 25 percent of CEOs reported that their boards were very effective at building a leadership culture of trust, compared to 53 percent of supervisory committee members and 44 percent of board members. Previous Next

< Back Great Things from the Great North Michael Daigneault Jul 25, 2017 Three overarching Canadian principles that can be applied universally I love Canada. After all, my birth name is Michael George Daigneault. (You’ve got to say it with a strong French accent!) It’s as French-Canadian as you can get, and yes, you’ve guessed it – my family emigrated to the U.S. from the wheat fields of Weeden and Valcourt in Quebec. In all, many cool things are from Canada: governance geek, along with snowmobiles, egg cartons, insulin, Trivial Pursuit, Péché Mortel beer, Justin Trudeau, Celine Dion, Peter Jennings, Dan Aykroyd, Dwayne “the Rock” Johnson, Margaret Atwood, Shania Twain as well as the “Ryans” (that’s both Reynolds and Gosling) all are from Canada. In addition, the first credit union to open its doors in North America did so in Canada – at the start of the 20th century in Levis, Quebec. There Alphonse Desjardins organized La Caisse Populaire de Levis. Just about 10 years later, he helped organize the first credit union - just down the road a bit - in Manchester, N.H., and so credit unions were born in the United States in 1909. A few years ago, CUES began working more directly with its credit union members in Canada, and Quantum Governance had the good fortune to begin doing so, too. We have learned that while there isn’t just one set of standards in Canada there are, none-the-less, a number of overarching principles that guide Canadian credit union governance and are worth thinking about. They include: 1) A robust commitment to ongoing education: Canadian best practices and regulators focus on continuing education for all CU board members, CEOs and audit committee members. Now, we’re not suggesting that credit union education in the United States needs to be regulated. We would, however, stand up and cheer if more credit unions would require regular training for both board members and senior staff. So much is changing; so much has yet to be learned. 2) A durable culture of responsibility and accountability : We’re doing more and more studies for our U.S.-based clients on board member compensation. One of their stated interests is an increased measure of board member responsibility and accountability. We’ve seen this in our neighbors to the north, where compensation for board members is a normal course of business, along with a remarkably high level of responsibility and accountability. 3) Ongoing board member skills evaluations. A unique aspect of the Canadian regulatory framework is to require regular evaluations of board member skills. While it has increasingly become a best practice in the United States to evaluate boards as a whole , our Canadian credit union clients pushed us to create a new tool to support their special needs – a “ Director Skills Assessment .” This assessment goes a step deeper to help evaluate individual board members’ contributions to the leadership of the credit union across five key areas: 1) governance culture; 2) personal attributes; 3) leadership skills; 4) engagement; and 5) knowledge centers. And so we say thanks to our friends to the North -- for peanut butter, Trivial Pursuit, some delightful beer, credit unions and some great ideas to help us along the way. Previous Next

< Back Help Your New Chair Move Up Michael Daigneault and Jennie Boden Jul 1, 2017 Here's what a top board leader needs to know to be successful—and what you need to know to help. Credit union boards often talk about ways to orient new directors. Many lament not having a defined process. Others have the CEO give an orientation on the credit union and its management team that doesn’t go so deep as a true board orientation. Such limited approaches leave new board members adrift in uncharted seas, and it can take years for them to find their governance sea legs. Another vital orientation process gets even less attention—the one for orienting new board chairs. Be honest. How much time have you given to thoughtfully defining the role of the chair and then—as objectively as possible—assessing and orienting the person who would best fit the role moving forward? If you are like most credit union boards, the answer is, unfortunately, “We really don’t do that.” Most CUs—maybe including yours—can do better with chair orientation. A first step for all directors to consider (since they could all become chair eventually) is to define the responsibilities of a chair, so your CU can map training to what the chair needs to know. Here are six key things your “board manager in chief” needs to be able to do or support. 1. Build a Positive and Healthy Board Culture and Structure Being able to meet this responsibility is driven partly by the chair’s character, values and beliefs. The culture of your credit union over the years also plays a critical role. But do not rely on your credit union’s culture alone. The incoming chair must buy into the current culture wholly and add to that his or her own commitment to a healthy and deepening culture. On the structure front, ensure that your board chair commands a keen knowledge of governance best practices, including roles and responsibilities of board members and officers, committee structures and charters, board meetings and information architecture. 2. Inspire and Engage the Board Inspiration is the ability to “fill someone with the urge or ability to do or feel something, especially to do something creative.” Is your incoming chair an inspiration? Does he or she bring personality, charisma and values to the table? Are they, themselves, inspired to lead? Beyond the personal, ensure that your board chair is adept at building relationships, reading people and identifying a match between skill level and challenge. Add to these skills the right committee structure, clear charters and appointments to those committees based on talents and interest, and you have a great recipe for engagement. 3. Set and Model High Standards for the Board and Staff Some education about ethics and compliance issues will be necessary. We are finding more and more that credit unions would benefit from maintaining a code of ethics (also called a code of conduct), and we encourage you and your board to consider the development of one. Ensure that your incoming chair understands the difference between ethics (standards of conduct or principles arising from an organization’s core values about how we ought to act or decide) and compliance (following or obeying a law, rule, regulation, policy or procedure). Both are important and both need to be adhered to by the board and staff. Finally, ensure that your incoming chair embodies and adheres to the highest ethical standards and practices. Not only will your board members be watching, but the staff will take note (and follow suit), too. 4. Craft and Effectively Facilitate Meetings Everyone thinks this is the easy part of the job. But trust us, it’s not. Of the credit union board and staff that we’ve surveyed, only about a third believe that they do a very effective job of allocating enough time at board meetings to discuss important strategic issues, and more than a third of the same respondents report that they are doing a less than effective job of achieving the right balance between strategic versus operational discussions in the boardroom. Effective board meetings begin with the creation of the board agenda—a task best practice assigns to the board chair and the credit union’s CEO. How often do you ask “What’s the purpose of the next board meeting?” A board chair should be trained in strategic thinking and planning, to ask good (and hard) questions, and to keep the big picture in mind. Seldom, if ever, do board chairs receive formal training on meeting facilitation. This can be worthwhile. Also, consider exposing potential chairs to leadership roles at the committee level. To help develop potential chairs, you might also identify portions or segments of board meetings that could be facilitated by vice-chairs and other emerging leaders. 5. Act as the Key Liaison With the CEO Some management experience or awareness of basic HR principles will be helpful as your board chair gets started in the role. This difficult task is made more challenging by the fact that the CEO does not report only to the board chair. The board as a whole has the power to hire or terminate the CEO, and thus, the CEO reports to the full board, not just one individual or committee. But the chair does play a critical role in the board-CEO relationship. He or she should serve as the coordinator of activities between the board and the CEO—setting a tone for communications, helping to identify priorities and providing high-level guidance and counsel as needed. The chair should also ensure that a fair and effective process of evaluating the CEO’s performance is regularly conducted. Such a process should be transparently agreed upon by the board as a whole—and the CEO. The evaluation should be one where all board members provide genuine input—not just the chair or a small subset of the board. 6. Serve as One of the Credit Union’s Chief Ambassadors In partnership with your credit union’s CEO, your board chair will be expected to serve as an ambassador-in-chief. Rarely does a chair ascend to the position fully briefed and trained on how to deal with the public, let alone the media. This position will require that and much more. Consider formal training on dealing with the media and communicating with the public. 7. Ensure an ‘Optimal’ Chair Now that you’ve defined the job, you will want to ensure that your incoming board chair’s skill level matches the requirements of the job. Do not just assume that the current vice-chair is ready to be chair or is the best person to assume the position at any given time. Some vice-chairs are great in the vice-chair role but falter when they take the helm. This is particularly the case if they have not had the experiences or training designed to assist in making the transition as smooth as possible. Further, be mindful of the state of your credit union when identifying a new chair. If you are in the midst of a big merger or acquisition, it would be great to have someone in the chair role who has experience with such endeavors. Similarly, a candidate for chair with a background in human resources may not be the perfect person to lead the credit union through a financial crisis but might be a terrific resource if you are experiencing rapid growth or a major shift in the management team. Clearly, a great chair for one period of time in your credit union’s history might not be the right chair as circumstances change. It reminds us of the title of a great book by executive coach Marshall Goldsmith: What Got You Here Won’t Get You There . Being board chair demands a high degree of responsiveness that is particularly vital in times of swift and unpredict-able change. Credit unions need a chair that can effectively steer the board in a manner consistent with the rapid changes impacting your credit union, as well as being the right leader for where your credit union is on its unique journey. Finally, be sure to institute a mentoring program for emerging leaders, including your chair. Consider including your immediate past chair or an effective chair emeritus in the process. Individuals who have “walked the path” can be tremendous resources for those just beginning their journey. It can be lonely to be chair. If a mentor is not available, consider a coach for your new chair. Much like executive coaches for CEOs and other credit union senior staff, coaches can be helpful in guiding new chairs to acclimate and flourish in their new role. Very few board chairs come to the job fully trained and ready to go. Most of what your current board chair knows was likely learned on the job. But you can change that for future chairs and help them (and your credit union) step up to success. Previous Next

< Back Double Your Fun: Tracking Strategic Planning For a Brighter Future Paul Dionne Feb 21, 2025 When it comes to strategic planning, I often start with guidance from Harvard Business School professor Michael Porter. Porter was the first to develop a research-based understanding of competitive strategy, and his approach begins with the dramatic premise that operational effectiveness is not a strategy ! Of course, to have a shot at sustainability and success, any enterprise would do well to focus efforts on running an effective shop. But simply improving how you do business is not sufficient to succeed over the long term. Porter’s claim was meant to be provocative because he wanted strategists to avoid falling into the operations trap. The trap is solely focusing on running an effective shop, which can be imitated by competitors all of whom are also working to improve their operations. When you consider immensely larger competitors such as big banks or fintechs, competing on operations alone probably won’t work. I can assure you that your budget and staffing for your new banking app is tiny compared to what Bank of America is spending on theirs. And yes, credit unions certainly want to offer competitive rates to members and potential members, but good rates alone won’t cut it either. Porter notes that firms who rely on operational effectiveness alone will inevitably be outflanked by competitors who can be similarly effective and are also building strategic advantages such as product differentiation and/or a deep focus on meeting the needs of specific consumer segments. Credit unions need to walk and chew gum – they should run an effective shop and also identify, choose and develop a competitive strategy that rests on being different. How can your credit union create unique value for members and potential members that is difficult for others to copy? The Future Demands Strategic Differentiation In strategic planning, credit unions often throw everything into a single process. The outcome can be muddled and end up over-indexed on the side of objectives that seek to improve operational effectiveness. Far less common is a holistic strategic plan that explicitly seeks to achieve competitive advantage. Operational effectiveness is important, but it is not sufficient to ensure future sustainability. What is also really important is figuring out how you are going to connect with new, especially younger members and provide next-generation financial services that fulfill their needs. That is where “running a tight ship” will fall short over the long haul. The credit union of the 20th century (bless our brilliant and creative forebears!) will not survive the 21st century without major upgrades to a competitive strategy and value proposition that speaks meaningfully to members hailing from the 21st century. It is their century, after all. Old fuddie-duddies like me are just living in it until our kids take over. What is to be done? To ensure you are covering both bases and building a clear and coherent strategy, divide your planning into two tracks. Tracking for Success An alternative approach to strategic planning calls for clearly dividing the process into two tracks, one focused on improving operational effectiveness and one devoted to developing long-term strategic advantage. The first takes into account all those analyses and enhancements to identify and leverage efficiencies, strengthen processes, and find ways to match or beat peers on operational metrics. The second track is more focused on changes that will position the credit union for a bright future. Senior Management and the Board should understand both efforts and learn how to support each of them from their unique perspectives. Track One: Operational Effectiveness The first track is always in play and strategy sessions should result in an annual plan for improving operational effectiveness. The key question is: How can we run a tighter ship? The types of questions and initiatives might include: How can we lower our efficiency ratio or NIM? How can we grow inexpensive, longer-term deposits? Is it time for a core conversion? These efforts can be measured, benchmarks set, and KPIs measured by Senior Management with oversight from the Board. Track Two: Competitive Strategy The second track toward building competitive advantage over the long term is where credit unions often fall short. Devote time to this work! Start from your mission and map out where you want to be in 5, 10, 25 years. The key question is: How can we be viable in the future? The types of questions and initiatives are broader and might include: What financial problems will our future members have and how can we help solve them? What makes us truly different from our competitors and how can we strengthen that difference? What should we stop doing to better advance our priorities? This effort is more difficult to measure, but it is critical to long-term success. One example might include an integrated community development approach that combines household financial well-being, targeted “healthy community” philanthropy and small business investment to create a value proposition that promotes robust communities and economic prosperity for all. Don’t fall into the trap of avoiding long term investments into changes that cannot be easily quantified or that will not deliver in a single annual cycle. Advancing strategy requires vision, discipline, and a willingness to sometimes sacrifice short-term gains. Continuity of purpose and effort are critical here. Combine, Measure, Socialize Does a two-track planning process lead to two business plans and scorecards? Ideally not. After the heavy rocks have been identified and set into place, build a combined business plan for the coming year that clearly defines and includes next steps from each track. This is where the work of integrating the two tracks is finalized and where you should build in mutually-reinforcing activities. Metrics and KPIs are essential for first track goals. A combination of metrics and milestones are often more relevant for second track goals. Socializing both the long-term vision and the short-term business plan across the credit union is another important step. Each staff needs to have an understanding of the work to be done and how they can move the needle. By delineating two tracks in your planning process, you will not lose sight of needed reflection and problem-solving for both business and strategic improvements. You get to double your fun. Don’t avoid the challenging work of designing and implementing changes that will create strategic advantage for your credit union over the long term. Adopting the two tracks in your strategic planning process means you will be more directly and clearly addressing the credit union’s short-term needs and opportunities for the coming year and, at the same time, identifying and building a pathway to longer term success. Previous Next

Governance Services We offer a variety of ways to assess your governance employing a combination of the following methodologies: proprietary online survey, document review, interviews with members of your board, supervisory/audit committee, and executive leadership. Additionally, focus groups, meeting observations, member surveys and environmental scans may be added. Governance assessments are scaled to meet your organization’s needs. We can deliver the results of your assessment via an expertly facilitated retreat or a series of in-person or virtual workshops. Deliverables may include a report, best practices tailored to your organization, and a governance action plan. Additional governance services include: credit union industry benchmarking, year-to-year analysis for returning clients, developing a roadmap for growth and pre-merger assessment. Additional Governance Assessment Tools Leadership Culture Assessment & Policy Development CEO Evaluation Peer-to-Peer Evaluations Director Skills Inventory & Director Development Planning CEO Succession Plan Assessment & Development Supervisory/Audit Committee & Other Committee Assessments Board Succession: Assessment, Board Member of the Future Profile Development, Recruitment, Nominations & Succession Plan Development Communications & Information Architecture Study: Reimagining Your Board Packs & Meeting Agendas Contact us to learn more about how we can strengthen the leadership and governance of your organization. Jennie Boden, CEO "One of the most vital governance issues that organizations are faced with today is the evolution of their governance policies, practices and systems as they grow. We've found that -- as one CEO put it -- many have been 'working with their Boards, but not on their Boards.' While the organizations (including the Management) are growing and evolving, so, too, must an organization's governance."